By investing in private debt, investors can gain exposure to a different asset class that has a low correlation to traditional stocks and bonds. This can help to reduce overall portfolio risk and increase potential returns

Private debt investments tend to be less volatile than equity investments, which can make them a good option for investors looking for a more stable return.

According to the Cliffwater Direct Lending Index, private debt funds have returned to an average of 9.4% annually over the past decade, compared to 2.2% for the Bloomberg U.S. Aggregate Bond Index.

Capital is the ability to endure economic downturns. A low captial position in a business raises questions from a lender about the owner's commitment to their business. A strong capital base creates an "alignment of interest" between the lender and the borrower